Xerox Case
What kind of strategic planning process (bottom-up or top-down) did Xerox follow for its turnaround? What inference can you make about the effectiveness of this approach?
Needless to say that changing of the strategy in Xerox was paramount for the company’s further development or even survival in 2000-2002 (Mohr, Sengupta, & Slater, 2010, p.492). There are different types of strategic planning to be adopted, and it must be based on the competitive advantages of the firm, its objectives and vision, and specific action plans to be followed. Top-down perspective of the strategic planning has been widely used for decades, while bottom-up approach is adopted in lesser cases. The first method reflects top managers’ vision of the company’s large scale path, whereas the second type of strategic planning is more concerned of the operational peculiarities of the business, thus goes from the lower-level managers (Kim, Sting, & Loch, 2014, p.4) Both methods have their pros and cons. Top-bottom one is faster in realization but brings a solid pressure on the employees. Meanwhile, bottom-up method involves larger amount of workers in the planning process, which makes the plan to be flexible and increases the feeling of a collective responsibility. On the other side, it is rather time consuming and rarely applicable for truly significant changes in the company’s strategy.
Hereby, I would say that Anne Mulcahy, as a CEO of Xerox used a mix of both approaches. A top-down method was used as a first stage to acquire fast changes and to get a breathing room for further decisions. At this stage Mulcahy cut firms capital expenditures by 50%; reduced its sales, general, and administrative expenses by a third; and slashed its total debt in half (Mohr, Sengupta, & Slater, 2010, p.493). The second stage was oriented on improving the operational efficiency, thus required participation of operational managers; which is a bottom-up planning process method. As a result, Xerox improved its financial position significantly.
While Xerox PARC made a number of breakthrough innovations during the 1970s and 1980s, it doesn’t seem to have benefited competitively from these. What inferences can you make about the culture of innovation at Xerox in the 1970s and 1980s?
During the period of 1970s-1980s Xerox was producing high-technology and innovative products; moreover, there was a limited number of rivals in the market. However, the company promoted their goods only via limited channels, like direct sales force, as well as through a network of independent agents, dealers, value-added resellers, and systems integrators. (Mohr, Sengupta, & Slater, 2010, p.493). As it was later described in the case study, more intensive marketing strategy, especially advertising could have helped a lot to keep the market share and even increase the sales. Consequently, company’s failure was caused by a weak sales plan.
Identify and prioritize the key success factors for Xerox’s turnaround. Link them clearly to high-tech marketing concepts.
Anne Mulcahy took the following key steps for Xerox’s turnaround: (1) changed the brand to a customer focused one; (2) the company stick to its main competitive advantage – digital color printing; (3) large sums were spent on advertising the updated and new products; (4) company started actively gathering client’s feedback, which helps it to become even more customer oriented; (5) expenditures were cut significantly; (Mohr, Sengupta, & Slater, 2010, pp.493-494) By this Mulcahy followed the main stages of the effective marketing planning for a high-tech innovative company. They focused on the firm’s operational advantage, became customer oriented so that to be able to respond to the main client’s needs within their field of proficiency, and adopted new sales strategy.
Brand equity or brand value is defined by the consumers’ perceptions of the brand and their ability and willingness to purchase products under this brand (Chen, & Green, n.d., p.2). Thus, improving only financial conditions of the firm is not enough to restore the company’s brand. In the modern world of rapid development of innovative technologies, a company that wants to create a solid and recognizable brand must offer its clients something more that just a high quality product. Therefore, one of the most important steps for Xerox to increase its brand equity is to follow the customer-oriented strategy, keep gathering and providing feedback, provide high quality assistance and support, keep the connection with the audience through advertisements and, perhaps, social marketing.
Does Xerox have a foundation for competitive advantage? Why or why not?
For decades Xerox remained a leader and pioneer in the industry, thus it has its competitive advantages in the operational process. Furthermore, as it was discussed before, being customer oriented is also a competitive advantage that can be used to compete with Xerox’s closest rivals. I would also add breaking through the crisis in 2000s as another company’s strength, as this experience may become vital in case of any market shakes in the future.
References
Mohr, J., Sengupta, S., and Slater, S. (2010) Marketing of High-Technology Products and Innovations. 3rd ed. Upper Saddle River, NJ: Pearson Education, Inc. ISBN-13: 978-0-13-604996-8
Kim, Y.H., Sting, F.J. & Loch, C.H. (2014) Top-Down, Bottom-Up, or Both? Toward an Integrative Perspective on Operations Strategy Formation. Journal of Operations Management 2014, JOM Web site DOI: 10.1016/j.jom.2014.09.005. Available at: https://www.repository.cam.ac.uk/bitstream/handle/1810/246059/OA1736_JOM-2014-FINAL.pdf?sequence=1
Chen, H.C. & Green, R.D. (n.d) Brand equity, marketing strategy, and consumer income: A hypermarket study. Journal of Management and Marketing Research. Available at: http://www.aabri.com/manuscripts/11828.pdf
